My Thoughts To Help Manage Your Portfolio

December 12, 2002
Gary Kaltbaum

Yup! It’s that time of year where we break
out all the fun things you have heard. No, not from me…but from all the famous donutheads. You know, the ones that make millions to be woefully wrong. Since
it is the holiday season, I will be nice. I will only mention one person who was
wrong, by name. The rest you can figure out for yourself.

For those who have read my columns for years, this will be more comedic. For
those who are new to TradingMarkets and to my thoughts, this stuff will take on
a serious tone. You see, underneath what I am going to tell you is the trillions
of dollars that have been lost by an unsuspecting public. A public that was
trusting of everything all the famous gurus would say. Unfortunately, this
brutal bear market has changed all that.

There is a lesson to all this and it is a simple lesson.
LEARN HOW TO MANAGE YOUR PORTFOLIOS. Don’t leave your performance to
chance. Don’t leave your wealth to the whims of the marketplace…and certainly
someone’s opinion. It is easy to throw blame, isn’t it? Just blame the market,
your broker, the analyst, the strategist, the moon being in conjunction with
Mars. I urge you to blame yourself if you have massive losses. That’s the only
way to get better at this game. Learn from your mistakes.

I ask you to take the
time to figure out how long it took to save the money you have. How much
sweat…how many hours? Don’t just let it go poof. The following is an example
of what is wrong with Wall Street. It is simple. No one can predict the market a
year out. But that doesn’t matter. It is December. You are going to be inundated
with the “TOP 10″…”THE BIG 20″…”TARGETS FOR 2003″…Magazines with covers
entitled “Investing for 2003.” Read this. That’s fine. But then burn it. In my
humble opinion…it is worthless. There are just too many variables to know
where things are going to be.

I must start off with BusinessWeek‘s market survey for 2002.
BusinessWeek polls all the top strategists and their forecasts for the
following year. Here is the tale of the tape.

Out of 54 strategists, 48 said the market would go higher…2 said it would be
about flat…1 said about a 10% loss…1 said a 15% loss…1 said a 19%
loss…and the winner is Joe Barthel of Fahnestock who said the market would be
down 20%. Of course, Mr. Barthel is a technician…get the hint. Others who got
things right were Bernie Schaeffer…I recommend his readings highly…Doug
Cliggott…who has been right for a couple of years and George Jacobson.

The consensus estimate was for the Dow
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finish at 11,090, S&P 500
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Nasdaq at 2236. Hey, I told you there was a lot
of comedy to this. The one person and company I must mention is Ed Kerschner of
UBS/Paine Webber. You see, his target for the S&P 500 this year was 1800…yes,
I said 1800. The market would have to double for that number to be reached. Last
I looked, the market has been returning 10%/year…so maybe it reaches that
level in 2009. They actually went out of their way to let the world know about
this as the company took out full-page ads in every major newspaper heralding
the new bull market. Mr. Kerschner…last I checked…still has his job.

That brings me to the CNBC stock-picking contest. CNBC had several strategists
give out their favorites for the year. Needless to say, by mid-year, CNBC
discarded the contest for the laughable underperformance. One gentleman had
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on his list which has gone from the 40’s down to $2. I believe his portfolio was
down 50%-60%. Another lady who can be seen on Wall Street Week often and was
just named head strategist for the biggest discount firm (you can guess) was
down a measly 60+%. Once again, to be fair, they only picked a few stocks and
had to hold them all year long.

Need I say more? I will say that I applaud all these people for putting
themselves on the line. I would never do it. I would never predict what is going
to happen by the end of next year…and why. No one can. The only way I would
enter the contest is if I had next year’s newspaper today.

YOU CANNOT PREDICT MARKETS. YOU CAN ONLY INTERPRET. ALL
YOU NEED TO KNOW IS WHAT’S HAPPENING TODAY TO STAY AHEAD. For me, I don’t
know what I am eating for dinner tonight.

Now, onto the market. I DO NOT LIKE WHAT I AM SEEING.
For starters, there is still too much bullishness and complacency. More
importantly, major indices have been wedging up the past few days on lighter
volume.

Here are some important numbers to watch:
Â 892 on the S&P 500, 8473 on
the Dow, 1367 on the Nasdaq. A violation of these figures on a closing
basis…and very simply, the market will have another leg down. I would also
make note that GOLD has now broke above the
important $330 level…which has been important resistance. The only thing the
market may have going for it is that there is seasonal strength coming up.

I will be appearing on FOX NEWS CHANNEL on Friday, Dec. 13 ON Neil Cavuto’s
“YOUR WORLD.” It airs from 4:00 p.m. to 5:00 pm ET.

I will also be appearing on FOX NEWS CHANNEL this Saturday, Dec. 14 on “CASHIN
IN.” It airs at 11:30 a.. ET.

Gary

My Thoughts To Help Manage Your Portfolio

BUY THE FEAR, SELL THE GREED

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